MANATEE -- A national drought is causing a financial squeeze for some Manatee area dairy farmers.
Around the county, state and nation, dairy farmers are barely staying afloat as expenses for commodities like corn and grain used for animal feed increase.
Projected corn prices have risen from $5.40 to $6.40 per bushel or eight gallons, and soybean meal prices have gone up from $365 to $395 per ton for the remainder of 2012 and into 2013.
John Peachey, owner of Peachey Dairy in Myakka, said animal feed has increased about $5 per 100 pounds and instead of consuming half a farm's gross revenue, animal feed now costs about 90 percent.
"It's a losing situation right now," he said.
And as more farmers are forced to sell their cows for beef to absorb costs, milk production is decreasing and milk prices are increasing. The situation is already affecting consumers.
Class 1 milk, or beverage milk, is up $1.29 per hundred pounds from last month. In October, beverage whole milk is expected to increase 11 cents
per gallon and 2 percent milk will increase 9 cents per gallon, according to market projections.
"With the market as weak as it is, our problem is an inability to control our cost," said Joe Wright, president of Southeast Milk, Inc., the largest cooperative in Florida and owner of 1,300 acres of dairy farm land in Hardee. "Last summer, we had record high milk numbers. We expect to see that kind of money in 2013."
In 2011, Manatee ranked eighth in the state in dairy production with annual receipts of more than $11 million. Florida ranks No.1 in the Southeast and 19th in the nation in milk production according to Florida Dairy Farmers, and in 2011, about 118,000 dairy cows in Florida produced more than 250 million gallons of milk.
Some local farmers said consumers may see beverage milk priced as high as $4 per gallon by next year.
"It's been a hard year," Peachey said "You can't make a profit with feed so high."
The lack of rain in the Midwest, west coast and southwestern states has led to withered crops. Farmers able to grow corn, soybeans and other field crops are able to sell at high prices because their products are in demand.
"I have a bigger farm, but we've had to cut back and stretch out finances," said Jerry Dakin, owner of Dakin Dairy in Myakka. "The grass that we grow is 50 percent of their diet but we still have to use feed. You have so many commodity people and it's the farmers controlling the commodities and it's banks and speculators who switch things around and raise the market. They're using commodities as a way to make money. I'm the end user and I have to buy it. They've put prices up and eventually it affects the consumers."
The United States Department of Agriculture has declared 1,692 counties in 35 states, including Manatee and Sarasota, as disaster areas due to the drought. The USDA has committed to utilizing nearly $16 million in financial and technical assistance to help crop and livestock producers and will transfer $14 million in unobligated program funds into the Emergency Conservation Program. Producers in the designated counties are eligible for aid.
In the meantime, all local farmers can do is try to maintain a business.
"It takes 90-120 days for our products to respond to the market," Dakin said. "We don't have that kind of money to keep going. It's been challenging."
The USDA recently lowered the forecast for milk output per cow by nearly 200 gallons for 2013 and expects to see a decrease in the number of cows. For the month of August, milk production was down in 23 major states by 0.2 percent from August 2011, marking the first time in more than two years production fell below prior year numbers.
Peachey, who also sits on the board of directors for the Florida Dairy Farmers, said negotiating with milk plants for better prices is necessary.
"Unless things turn around, some dairy farmers will be forced out of business," Peachey said. "And banks don't like to lend money when prices are too high."
Nick Williams, East Manatee reporter, can be reached at 941-748-0411 ext. 7049.